Reference no: EM132952294

Konza Son Bhd sells a heavy machinery with one year's free maintenance service support for RM75,000. It usually sells the heavy machinery for RM90,000 but does not sell maintenance service support for this machinery as a stand alone product. Other maintenance service support services offered by Konza Sdo Bud attract a mark-up of 30%. It is expected that the maintenance service support will cost Konza Sdo Bad for RM15.000

Problem 1: Which of the following statements best describes "stand-alone price"?

Option 1: The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third party.

Option 2: The price at which an entity would sell a promised good or service separately to a customer.

Option 3: An entity's right to consideration that is unconditional - i.e. only the passage of time is required before payment is due.

Option 4: Income arising in the course of an entity's ordinary activities

Problem 2: What is the amount of revenue to be recognized for the maintenance service support?

Option 1: RM15,356

Option 2: RM12,356

Option 3: RM13,356

Option 4: RM14,356